Counting Carbon in the Market Place – Certification to Product Carbon Footprint Standards and the Possible Trade Implica

1. Counting Carbon in the Market Place – Certification to Product Carbon Footprint Standards and the Possible Trade Implications Simon Bolwig, Risø, Technical University of Denmark Standards and Agri-Food Exports Project Conference and Book Launch. May 31 – June 2, 2010, Paradise Hotel, Zanzibar. Based on: Bolwig, S. and P. Gibbon. 2010. “Product Carbon Footprinting Schemes and Standards”, in P. Gibbon, S. Ponte and E. Lazaro (Eds.), Global Agro-food Trade and Standards: Challenges for Africa. Basingstoke: Palgrave Macmillan. Sponsor: OECD Trade and Agriculture

2. Content • What is product carbon footprinting (PCF) and what can it do? • Public and international PCF standards initiatives • Private PCF certification schemes: results from a global survey • Possible implications for trade and developing country exports

3. 1. What is a product carbon footprint? • Information about the total amount of GHGs emitted during the life cycle of a good or service • Grams CO2-eq. per unit of product • “Consumption” approach to climate change mitigation (vs. regulation at source)

4. Life cycle analysis • Method for calculating the sum of GHG emissions from activities along the entire life cycle of a product • From “Cradle-to-grave” or “Farm-to-fork” Source: www.zespri.com • Requires provision of information from many actors along the value chain (>< corporate GHG reporting)

5. The carbon footprint of a New Zealand kiwi fruit eaten by Adam in Zanzibar • Data source: www.zespri.com • Total footprint: 1.74 kg CO2 Eq. per 1 kg of fruit

6. Some research questions • What is the function of PCF? • Is PCF demanded by consumers, clients and investors? • What standards and certification schemes are being developed, and by whom? • What are the features of these standards and schemes? • Do these features disadvantage certain producers or countries – small, distant, developing? • Do they create barriers to trade?

7. What can PCF be used for? • Help prioritise GHG reduction efforts along the entire supply chain • Zespri Kiwifruit focuses reduction efforts at the orchard, packhouse, coolstore and transport stages • Compare the footprint of “similar” products delivered by different supply chains • Broccoli imported to Sweden from Ecuador has a similar PCF to those imported from Spain • Compare the footprint of “similar” products with different attributes • The footprint of a 330 ml can of Coke is half the size of 330 ml delivered in a glass bottle (Coca cola PCFs)

8. (Cont’d) • Designate products as “carbon neutral” through off-setting • The “CarboNZero” and “Stop Climate Change” schemes • Basis for demonstrating corporate commitment to climate change • To consumers, clients, investors and lawmakers • Display of information on packaging, websites, CSR reports

9. Will product carbon information influence consumer behaviour? • 72% of EU consumers support mandatory carbon labelling • Eco labelling is important for 47% of EU consumers • 48% of EU consumers mistrust producers’ environmental claims • Environment ranks 3rd after quality and price in purchasing decisions What sells a beer in Japan?

10. Will product carbon information influence client and investor behaviour? • Climate-change criteria do not appear important for corporate buyers • They do not appear important for company valuations or for investment portfolio managers • But perceptions in business communities are changing fast

11. 2. Public PCF standards initiatives • PAS 2050 – BSI and Carbon Trust (Oct. 2008) • ISO 14067(2011) • WRI-WBCSD Product Life Cycle Accounting and Reporting Standard (2011) • Japan Carbon Footprint System (April 2009) • Mandatory carbon labelling in France • EC initiative to integrate PCF in existing environmental labelling instruments (2009–11) • “EC is considering the preparation of a robust, reliable and EU harmonised PCF methodology”

12. 3. Private PCF standards and schemes • Private organisations calculating and certifying PCF information • Operated by consultants, NGOs, retailers and branded manufacturers • First schemes emerged in 2007 • 17-20 schemes worldwide • > 3000 footprinted products • Carbon Label Company (UK): 2800 products • L.Eclerc (France): 800 product categories • Wide product range, mainly food/drinks

13. Certification criteria • Comply with rules for calculating the PCF • Comply with communication rules • Commitment to GHG emission reduction • Carbon neutrality through offsetting emissions • Comply with other environmental criteria (e.g. recycling) Value Claim Value and sliding scale

14. Methodology • Publication of PCF methods and assessments • Most schemes rely on published methodologies • 3 schemes use the PAS 2050, adding own criteria • Few publish individual product assessments • Scope of product GHG assessments • All schemes claim to include all major GHGs • Most involve “full” life cycle analysis – but precise boundary unclear • Use of different methodologies, combined with poor documentation of methodology and individual assessments • No basis for comparison of PCFs across products and schemes Product carbon footprinting

15. Conformity assessment (verification) • Most operators certify products to their own standard • Disincentive to tightening the standard • Standards compliance difficult and costly for producers • Consumer scepticism is not taken seriously • Self-verification by scheme user (4) • Same organisation calculates and verifies the PCF (3) • Independent, 3rd party verification (7) • Verification rules and procedures often not transparent

16. 4. Possible implications for trade and DCs • Lack of international standard could favour producers in countries with public standards (UK, NZ, France?) or with non-proprietary private standards (Germany, Switzerland, UK, US) • No bias against producers in distant countries, but “distance travelled by product” sometimes highlighted as an additional feature • High initial costs and technical requirements of PCF could disadvantage small producers and producers in developing countries (scale economies important)

17. (Cont’d) • Emissions from the production of capital goods are sometimes excluded from the LCAs, imparting a bias against labour-intensive production systemstypical of many sectors in developing countries (esp. agriculture) • Unavailability of LCA databases and expertise in developing countries makes PCF relatively costly and time consuming

18. 5. Concluding observations • Consumers want more information on the climate impact of their daily purchases • But will they understand, trust and act on this information? • More private schemes and labelled products, but still small scale • Key issues: transparency, verification, data, comparability, costs • Increased engagement by governments and int. organisations • Key issue is standard implementation – accessible, harmonised and comprehensive LCA databases, costs (especially for SMEs) • The Future of PCF? • Steady but slow progress until LCA databases are further developed, costs go down and international standards are published and accepted

19. Product carbon footprinting